Trump’s $3 Trillion Budget Bill reignites global concerns over America’s borrowing addiction as economists warn of long-term risks to the dollar’s dominance
July-5, 2025: The United States has officially crossed a jaw-dropping milestone — a $37 trillion national debt. As Donald Trump proudly signed his “Big Beautiful Budget Bill” on July 4, 2025, critics warned that the celebratory mood might be premature. Trump’s sweeping tax-cutting plan is expected to add at least $3 trillion more to America’s debt burden.
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Among those sounding the alarm: Elon Musk, who called the bill a “disgusting abomination,” and Ray Dalio, the world’s largest hedge fund manager, who believes the U.S. is at an economic inflection point.
🏦 Why $37 Trillion Matters
The U.S. borrows money every year to bridge the gap between what it earns (via taxes) and what it spends (on defense, healthcare, and more). But how long can this go on?
The warning signs are starting to show:
- The dollar has dropped 10% against the pound and 15% against the euro this year.
- The yield curve has steepened, indicating investors are nervous about lending long-term to the U.S.
- Despite higher U.S. interest rates, the dollar is weakening — a reversal of normal trends.
Dalio estimates that $10 trillion a year could soon be going to loan repayments and interest if no changes are made.
📉 Three Scenarios for Trouble Ahead
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Economists say there are three paths if the debt becomes unmanageable:
- Drastic Budget Cuts or Tax Hikes
Cut spending, raise taxes — or both. But Trump’s current plan does the opposite, trimming spending slightly while cutting taxes more. - Printing More Money
The U.S. Federal Reserve could print more dollars to buy government debt, as it did post-2008. But this risks fueling inflation and widening inequality. - The Unthinkable: Default
A U.S. default on its debt would shatter global markets. The phrase “full faith and credit of the U.S. Treasury” underpins the entire financial world. A collapse here would make the 2008 crisis look minor.
🧼 The “Cleanest Dirty Shirt” Problem
Despite all the concerns, the dollar’s global dominance remains. Why? Because, in economist Mohamed El-Erian’s words:
“The dollar is like your cleanest dirty shirt — you have to keep wearing it.”
Even as investors increase holdings in gold, the euro, and the pound, there simply aren’t enough viable alternatives to replace the U.S. dollar at scale.
Bank of England officials confirm that U.S. Treasury Secretary Katherine Bessent is well aware of the risks. But so far, no dramatic shifts have occurred.
📊 Is the Debt Really That Bad?
Let’s put it in perspective:
- U.S. GDP = $25 trillion
- Debt = $37 trillion
- Debt-to-income ratio is high, but not worse than Japan or Italy
- The U.S. still has the world’s most innovative and productive economy
A commonly cited stat:
💡 If you saved $1 million per day, it would take you 100,000 years to pay off $37 trillion.
📚 The Dollar Has Been Declared Dead Before
In 1968, William F. Rickenbacker published “Death of the Dollar”. He’s long gone — but the dollar isn’t. Yet today’s scenario reminds us: global dominance is not a birthright. It must be earned, protected, and responsibly managed.
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US national debt, $37 trillion debt, Trump budget bill, US economy 2025, Ray Dalio US debt warning, dollar collapse, US yield curve, Mohamed El-Erian, global reserve currency, Federal Reserve policy, US default risk